In a new initiative that could facilitate the development of a market allowing banks to finance themselves on better terms, Italian banks may soon be able to issue covered bonds. If the proposed new legislation is passed, Italy will follow at least 12 other countries in Europe that have adopted new legislation or adapted existing legislation to the same end.
In Germany, covered bonds were first issued at the end of the 18th century, while France, Ireland, Sweden and Luxembourg have all recently opted to pass specific enabling legislation. In the UK, no specific legislative changes were necessary. The first issue of covered bonds in 2003 made use of existing legislation, combining securitisation techniques with corporate guarantees to create a covered bond.
